It’s a possibility for sure.
- It’s important to have money in the bank for emergencies.
- Employers could start helping workers save for the unexpected the same way they help them save for retirement.
If you’re a salaried employee, you may be entitled to a host of workplace benefits, like subsidized health insurance, paid time off for vacations as well as illnesses, and a 401(k) plan with an employer match. Many of the companies that sponsor a 401(k) plan for retirement savings purposes also match worker contributions to some degree.
That’s a very good thing, because it helps workers accumulate savings they can access in retirement, when they might need the money to pay their basic expenses. The problem, though, is that many workers lack emergency savings, and a big part of the reason boils down to the fact that they don’t get any help in building them.
But some lawmakers are pushing to change that. And if they get their way, employers could soon start matching contributions for emergency savings the same way they do for retirement savings.
An important need to address
Life has a way of throwing costly surprises people’s way. And that’s why everyone needs money in a savings account to cover unplanned bills.
Financial guru Suze Orman says it’s a good idea to save enough money to cover eight to 12 months of living costs. Unfortunately, that’s an unattainable sum for many people. But even saving enough to cover three months of expenses is a great way to secure a nice amount of financial protection.
Without help from an employer, though, some people might struggle to hit that mark. That’s why lawmakers recently introduced the Emergency Savings Act of 2022. Its goal is to make workplace savings accounts just as accessible to workers as 401(k)s, and to encourage employers to help workers build the cash reserves they need.
Orman is a huge supporter of this bill. As a cofounder of SecureSave, a fintech company that helps companies set up workplace savings accounts for employees, Orman thinks it’s important to remove barriers to building emergency cash reserves. And one way is to make it just as easy to save for the near term as it is to save for a far-off milestone like retirement.
Will companies start stepping up?
Right now, very few companies have programs in place to help workers save for emergencies. But that could soon change.
There’s been a big push for employer-level help with emergency savings, and as that movement gains traction, we could see more companies start to incorporate this benefit into their compensation plans. Of course, this doesn’t mean that come this time next year, most companies will be helping workers build their emergency funds. But we may see a larger percentage than the number of companies that do so today.
Until then, though, workers should do what they can to build savings of their own. That could mean getting on tight budgets, working side hustles, and cutting back on any bills that are non-essential. Without emergency savings, a single unplanned expense could lead to a pile of costly debt. And that’s a source of stress no one should have to deal with.
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